RETAIL OUTLOOK
Retailers are investing in a mix of physical stores and e-commerce channels
Buyers seek immersive retail experiences The convergence of online and offline selling is set to further accelerate in 2021
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ith the COVID-19 pandemic impacting most businesses, many retailers struggle to stay afloat. The Census and Statistics Department data show the provisional estimate of total retail sales in Hong Kong has decreased by 28.3% in volume for the first 10 months of 2020 compared with the same period in 2019. Research from Euromonitor International also revealed that the COVID-19 pandemic will cause a 3.5% decline, which will amount to $3.88t (US$500b), in global retail sales for 2020. However, Hong Kong’s retail market has already been struggling even before this year as growing social unrest brought by extradition bill protests resulted in disruptions in retail businesses. These events have caused many retailers to think quickly on their feet and adapt to the rapidly changing retail market by maximizing the online channels. Mainstreaming online retail trends This year, retailers have seen the
10 HONG KONG BUSINESS ANNUAL 2021
Lawrence Wan
Emily Leung
emergence of online trends such as livestream shopping and online shopping festivals. CBRE Hong Kong senior director Lawrence Wan said that as this occurs, retailers will also face a key challenge amidst fundamental changes in consumer behaviour. “Retailers are adapting to the change by diversifying retail strategies and investing in a good mix of brick and mortar stores and e-commerce channels,” he noted. Wan also mentioned that with the festive season approaching, customer sentiments have been improving in Q4 compared to the previous three quarters. With this improvement, together with major COVID-19 vaccine developments and gradual lifting of travel restrictions, he affirms 2021 will be more positive for Hong Kong. Meanwhile, IGD senior Asia retail analyst Charles Chan noted that whilst 2020 has seen exponential growth in online grocery and surge in sales for supermarkets, this will change in 2021. “Growth for these channels will lessen slightly in 2021, with
consumers moving past the initial shock and lifestyle changes that affect how and where they work and shop,” Chan said. Hong Kong’s grocery retail market has seen strong growth this year, despite more consumers staying at home for meals. IGD forecasts the grocery retail market to grow at an annual growth rate of 2% to 2022, with supermarkets accounting for more than 50% of the market. Chan mentioned that delivery platforms such as foodpanda and Deliveroo have formed new partnerships with retailers and have expanded their delivery coverage to provide convenient access to grocery for more shoppers. Integrating e-commerce The challenges brought by the pandemic has pushed many businesses to digitise operations and this has prompted more retailers to shift transactions online. E-commerce has also become more prominent and has challenged retailers to continue engaging and attracting customers.
